The Death Throes of Pro-IP Libertarianism

Like a submarine patent, the intellectual-property issue has lurked beneath the surface of libertarianism for decades. IP was for a long time largely assumed by most libertarians to be legitimate, a type of property right. This is because of the influence of Ayn Rand, one of the most influential of all modern libertarians, who was strongly pro-IP. One reason Rand was so much in favor of IP was probably due to her reverence for the American system, which enshrined patent and copyright in the Constitution, which she saw as almost perfect (Judge Narragansett in Atlas Shrugged only had to tweak a few things to make it ideal).

But though weakly pro-IP, most libertarians never gave the issue much thought, assuming that it was an arcane and technical type of property right whose details were best left to experts. The arguments for IP looked similar in structure to those for regular property: there were principled, natural-rights-type arguments based on justice and the merit of production and "creating value"; and there were utilitarian arguments that said it makes sense for the market to provide incentives to innovate and create, just as it does to produce goods for a profit. But most libertarians didn't look at it too closely; indeed most had, and still have, a hard time distinguishing between copyright, patent, and trademark — they use them erroneously and interchangeably quite often.

My own Against Intellectual Property, first published in 2000, had a definite (and unanticipated) effect among libertarians, primarily, I think, because of its timing (five years after the Internet), and the fact that, although it built on the work of previous scholars, it was more systematic and comprehensive, and more explicitly integrated with Austrian-libertarian insights and principles (plus my status as a practicing patent attorney made some people take notice). In the last three to five years, it seems that the libertarian tide has turned against IP — dramatically and decisively (we might mark the inflection point in 2004, when Jeff Tucker asked me to to do a post on the Mises Blog collecting the various growing resources on IP, shortly after his ownconversion to the Light Side of the Force). Thus, today, most libertarians, especially the young, are very aware of the IP issue and are adamantly opposed to it; they see it as clearly unlibertarian (see Jeff Tucker, "The Great IP Breakthrough"; "Have You Changed Your Mind About Intellectual Property?").

While Objectivists, libertarians and conservatives strongly agree on the principle of physical property rights, the picture is much more divided when it comes to "intellectual property," a catch-all phrase for several different items, including patents, copyright and trademarks. In a landmark essay by Stephan Kinsella, Against Intellectual Property, argues that "intellectual property" is not only meaningless and harmful, it is in direct violation of the general principle of private property, and primarily constitutes a state-sanctioned creation of artificial scarcity, leading ultimately to poverty, not job creation and wealth.

The wider libertarian movement accepted the argument, put it into action (see this achievement) and moved on. Objectivists, on the other hand, maintained that what Ayn Rand spoke and practiced on the subject remains the unalterable truth.

"The direction of the future, of progress, is towards more abundance and prosperity and wealth. It is obscene to undermine the glorious operation of the market in producing wealth and abundance by imposing artificial scarcity on human knowledge and learning."

Why the sea change in the prominence of IP as an issue among libertarians, and their decisive rejection of it, in contrast to the apathetic pro-IP stance of the past? It appears that IP could be taken for granted only so long as no one looked at it very closely. But as soon as libertarians turned their attention to IP, they realized the case for it was full of holes.

But why did they turn their attention to it? Why did it emerge from the depths after decades of relative obscurity? A primary reason is that the damage done by patent and copyright law has been magnified and exacerbated by the advent of digital information and the Internet — copyright, for example, is being invoked more than ever because of the ease of duplicating and transmitting digital files. And the flood of news and information delivered over the Internet alerts millions to the consequences of IP law. We see horror stories every day (see "The Patent, Copyright, Trademark, and Trade Secret Horror Files").

The younger generation of libertarians is larger, more radical, more Austrian, more sophisticated, and more informed than ever before — largely due to the resources and efforts of the Mises Institute (just see the typical arguments made in the comments threads such asthese). Combine this with the mounting — and Austrolibertarian — case against IP and its more conspicuous damages and daily outrages, it's no wonder that the IP issue, out of nowhere it seems, in the last three or so years has been "settled": libertarians are now, almost universally, against IP. Their arguments are sophisticated, they are technically savvy, they love the Internet, and they love the Mises Institute and its complementary open-information policy (see Doug French, "The Intellectual Revolution Is in Process"; Jeff Tucker, "A Theory of Open" and "up with iTunes U"; Gary North, "A Free Week-Long Economics Seminar"). The young libertarians and Austrians "get it." For them the IP issue (and, increasingly, the anarchy issue) is a no-brainer.

The speed of this recent IP awakening appears to have caught the old-guard libertarian defenders of IP — mostly Randians and older libertarians from a generation or two ago — slumbering, clinging to the tattered remnants of arguments for IP. As they have gradually realized that a revolution has taken place around them, a few have tried to mount a rear-guard defense; but it has been tepid and half-hearted for the most part. You can see it in the quality of their arguments. Most of these are smart libertarians, who usually make much better arguments than they do when talking about IP. Why are their arguments so weak? It is because they are just wrong. There is no defense of IP (see "There are No Good Arguments for Intellectual Property").

IP law is unlibertarian and unjustified. I realized this myself after trying, and failing, for years to figure out a way to justify IP and square it with libertarian principles. IP is a type of systematic redistribution of property rights, contrary to Lockean homesteading rules, that can only be implemented by the state and its legislation. So the IP libertarians have nothing left but the tired old arguments of the type you might hear dashed off in law school or in a mainstream economics class.

They trot out tired bromides, make unsubstantiated claims, refuse to engage critics honestly. We own things we create, they say, even though ownership is meant to solve conflicts over scarce things (see "What Libertarianism Is"), not just any thing you can conceptualize and put a name to. Or they'll repeat the Randian notion that you own "value" that you create, as if value is a substance you create, as opposed to the way we demonstrably regard and use an object due to its configuration (see "Rand on IP, Owning 'Values,' and 'Rearrangement Rights'," discussing Hoppe's criticism of property rights in value).

They accuse "pirates" of "stealing"; when you point out that copying is not theft because the originator still has his copy, then they switch to some other argument, such as claims that the value of the original copy is diminished; when you point out that there are no property rights in value, but only in the physical integrity of property, they switch to arguments about incentives, even though they usually condemn utilitarian arguments. If you explain that every creator's work also built on the thought of others, they come up with a convenient public domain or "fair use" exception. When you point out obviously outrageous injustices of the current IP system, they say they are not in favor of the current IP system … yet they oppose the call to abolish it! And when you ask them what type of IP system they do favor, they have no answer, punting it to judges or Randian legislators to figure out, on the grounds that they are not patent lawyers or specialists!

"There are no property rights in value, but only in the physical integrity of property."

What does a libertarian say to that argument? Is that supposed to be serious? It reminds me of my conservative friends in Houston who are — surprise, surprise — in favor of NASA, and repeat the propaganda about the value of "spinoff technology." After all, think of all the spinoff technology the space program has produced. Never mind the cost of the unseen — have some Tang, boys! Ain't that Tang good? You woudn't want to be deprived of Tang, now, would ya?

When they say that we need IP to stimulate innovation, they presume that the value of the extra innovation thereby stimulated is greater than the cost of the IP system (see "There's No Such Thing as a Free Patent"). If you ask them how they know this, they have no answer. They've never wondered and don't care. Ask them what the cost of the IP system is, or what the value of the marginal innovation is, or how they even know it's a "net gain" — they have no idea (my estimate is over $30 billion net loss annually in America from patents alone — see "Reducing the Cost of IP Law").

And if you point out the methodological and moral problems with utilitarian reasoning (see Against Intellectual Property, "Utilitarian Defenses of IP"), why, you're a nutty Austrian or extremist! If you point out that despite their claim that the IP system generates wealth, almost all studies conclude otherwise (see "Yet Another Study Finds Patents Do Not Encourage Innovation"), they change the subject. Or maybe they toss out the sloppy comment that, well, America has done pretty well since its founding, which — eh, eh, EH? — was the same time we adopted patent law! Never mind that you could make the same argument about war, imperialism, democracy, antitrust law, taxation, and so on.

They demand to know how artists and innovators are supposed to be paid absent IP. If you point out that it's the job of the entrepreneur to figure out how to make profit in the market given the costs of exclusion and externalities, they are not satisfied: they switch from individualist free marketeers to central planners demanding to know exactly what a market freed of the IP restrictions they favor would look like. Never mind that one reason we don't know for sure what market institutions and practices would arise is because the statist IP they support has preempted and crowded these solutions out. And if you point out some possible solutions, they sneer and call it charity or "not enough."

When the holes in their weak arguments are exposed, they escalate and call us IP socialists or communists — even though the idea that people who mentally "labor" "deserve" a "reward" for their labor is itself Marxian (see "Locke, Smith, Marx and the Labor Theory of Value"; "Objectivists: 'All Property is Intellectual Property'"). Their escalating rhetoric is driven by a desperation arising from the growing awareness that they have lost. It resembles a bit the way the state keeps increasing IP protection — copyright terms always lengthening, the West twisting the arms of emerging economies to "strengthen" IP protection and the coming ACTA (see "Stop the ACTA [Anti-Counterfeiting Trade Agreement]") — in the face of a growing, unstoppable wave of piracy and torrenting. We are seeing the thrashings of a dying institution and a dying idea.

The mistake made by IP libertarians stems in part from the imprecise, overly metaphorical Lockean notion that the reason you own things you homestead is that you "own" the labor you "mixed" with these things — rather than the more straightforward argument that by first appropriating an unowned resource you establish a better claim than latecomers — no fiction of "labor ownership" is needed (see "Intellectual Property and Libertarianism"). This mistake permeates the modern — mostly Randian — thinking about IP. This way of thinking about homesteading, and the American Founders' choice to put copyright and patent in the "protolibertarian" American Constitution (even though it was just a centralizing document used in a coup d'etat as a legitimacy cover for the state; see "Rockwell on Hoppe on the Constitution as Expansion of Government Power"), and Rand's and others' adoption of these ideas, has created a road block to clear thinking about IP.

"'Making' or 'creating' simply refers to the process of transforming something you already own by rearranging it."

By assuming the "ownership" of labor, even though the ability to control one's actions and labor is simply a by-product or consequence of ownership of one's body (all rights are property rights, as Rothbard has shown), and not an independent property right; by assuming that creation is an independent source of property rights, even though it is not; by assuming values are created, ownable things, rather than the changed utility of property the owner himself rearranged — these libertarians have equated nonscarce ideas and patterns with physical, scarce resources. After all, by your effort or labor, you create a plow, a house, or a song, right?

By treating these dissimilar things — nonscarce, infinitely reproducible patterns of information and physical, scarce objects — similarly, the IP advocates try to treat them with the same rules. They take property rules designed precisely to allocate ownership of scarce physical objects in the face of possible conflict and try to apply them to information patterns. In so doing, they end up imposing artificial scarcity on that which was previously nonscarce and infinitely reproducible.

Thus, what the pro-IP libertarians have missed is that it is good that ideas, information, patterns, and recipes are nonscarce and infinitely reproducible. Technological and other progress is possible because we can learn and build on previous knowledge. The market itself crucially relies on emulation — entrepreneurs emulate the successful action of others, thereby competing and serving consumers, and always bidding down prices and even profits. (As Jeff Tucker has noted, the role of emulation and learning in the market is ripe for further research and inquiry by Austrians. See "Hayek, IP, and Knowledge"; Jeff Tucker, "Without Rejecting IP, Progress is Impossible.")

The market also enables the production of products that are scarce goods — with ever-increasing efficiency — and, crucially, makes scarce goods more abundant. The market is always trying to overcome and reduce the scarcity that is inherent in physical resources. The human actors on the market use infinitely reproducible, nonscarce knowledge and information to guide their use of scarce resources in ever-more efficient ways, so as to reduce the real scarcity that does exist in the physical world of useful goods. (See "Intellectual Property and the Structure of Human Action.")

And what does IP do? In the name of capitalism and the free market, it imposes artificial scarcity on things that are already infinitely reproducible. In the name of the market — the same market that is working to increase the abundance of scarce goods, to decrease scarcity — IP libertarians argue that we should impose restrictions on nonscarce information — to make it scarce so that it fits into the round-hole property-rights framework they have erroneously decided to apply to the square peg of information. They are going the wrong direction. The direction of the future, of progress, is towards more abundance and prosperity and wealth. We work with the real world of scarcity, using our ever-expanding base of knowledge to prosper in the face of scarcity; we make more things in the face of entropy and physical limitations!

It is obscene to undermine the glorious operation of the market in producing wealth and abundance by imposing artificial scarcity on human knowledge and learning (see "IP and Artificial Scarcity"). Learning, emulation, and information are good. It is good that information can be reproduced, retained, spread, and taught and learned and communicated so easily. Granted, we cannot say that it is bad that the world of physical resources is one of scarcity — this is the way reality is, after all — but it is certainly a challenge, and it makes life a struggle. It is suicidal and foolish to try to hamper one of our most important tools — learning, emulation, knowledge — by imposing scarcity on it. Intellectual property is theft. Intellectual property is statism. Intellectual property is death. Give us intellectual freedom instead!

1. As noted, the IP criticisms in my publications of course built on the work of earlier libertarians; but the point is that in recent years libertarians have widely accepted the anti-IP argument.

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